Balanced scorecard chartered institute of management. In this classic article from january 1992, authors robert kaplan and david norton propose an innovative solution. And it complements those financial measures with three sets of operational measures related to customer satisfaction, internal processes, and the organizations ability to learn and improve the activities that drive future financial performance. A balanced scorecard is a performance metric used in strategic management to identify and improve various internal functions of a business and their resulting external outcomes. David norton and i introduced the balanced scorecard in a 1992 harvard business. The idea was first set out in an article that kaplan wrote in 1992 for. The scorecard includes financial measures that reveal the results of actions already taken, as well as three sets of operational measures that show. Executives also understand that traditional financial accounting measures like. And it complements those financial measures with three sets of operational measures having to do with customer satisfaction, internal processes, and the organizations ability to learn and improve the activities that drive future financial performance. Januaryfebru ra y 1992 the balanced scorecardmeasures that drive performance robert s. Introduction to the balanced scorecard and performance. In set of balanced scorecard measures does not guarantee their view, financial performance is the result of op a winning strategy.
The balanced scorecard measures that drive performance by robert s. The balanced scorecard was originally developed by dr. Senior executives understand that their organizations, measurement system strongly affects the behavior of managers and employees. During a yearlong research project with 12 companies at the leading edge of performance management, the authors developed a balanced scorecard. Norton is founder and president of the balanced scorecard collaborative in lincoln, massachusetts.
The balanced scorecard measures that drive performance 1992. Pdf the balanced scorecardmeasures that drive performance. Kaplan article the balanced scorecard measures that drive. Commentary transforming the balanced scorecard from. The balanced scorecard measures that drive performance january february 1992 putting the balanced scorecard to work september october 1993 using the balanced scorecard as a strategic management system january february 1996 alignment and communicatio n acceptance and acclaim. The balanced scorecard as a strategic performance management tool provides a comprehensive set of financial and nonfinancial performance measures for the healthcare organizations to be strategy. Strategy maps and balanced scorecards constitute the measurement technology for managing in a knowledgebased economy. Traditionally companies used only shortterm financial performance as the measure of success. Commentary transforming the balanced scorecard from performance measurement to strategic management. Conceptual foundations of the balanced scorecard 3.
Hbr 1992 the balanced scorecard measures that drive performance by robert s. See the exhibit ecis ucts, lead time can be measured from the time the balanced scorecard. The balanced scorecard tracks all the important elements of a companys strategyfrom continuous improvement and partnerships to teamwork and global scale. Nov 18, 2014 the balanced scorecard measures that drive performance 1. Pdf the balanced scorecard for the healthcare organizations. The balanced scorecard measures that drive performance 1. First 90 days, by michael watkins, a proven guide for leaders in career transition, offers strategies for getting up to speed quickly in your new role.
Performance measurement and balanced scorecard implementation. Transforming the balanced scorecard from performance measurement to strategic management. Balanced scorecard financial measurement of organizational. The balanced scorecard includes financial measures that tell the results of actions already taken. Strategic performance measures are the foundation of effective strategy managementthe key to taking the balanced scorecard, or any performance system, from the theoretical to the applied. The balanced scorecard translates a mission and strategy into a set of measures and metrics that comprises of four perspectives which link to performance measures. The balanced scorecard measures that drive performance robert s. During a yearlong research project, the authors developed a balanced scorecard performance measurement system that allows executives to view a company from several perspectives simultaneously. To put the balanced scorecard to work, com panies should articulate goals for time, quality, and performance and service and then trans late these goals into speci. The bsc expands the traditional financial measures into three other dimensions to capture a balanced approach to measure performance in an organization. Bsc concept is based on the research performance in the organization. Januaryfebru ra y 1992 the balanced scorecard measures that drive performance robert s.
The balanced scorecard has been translated and effectively implemented in both the nonprofit and public sectors. They realize that no single measure can protives understand that their organizations measure vide a clear performance target or focus attention on. Kaplan is a professor at harvard university and david p. The balanced scorecard is like the dials in an airplane cockpit. When building a balanced scorecard, tailor the measures to fit your companys particular challenges.
The balanced scorecard is defined as a set of measurements that give top managers a fast, but comprehensive view of the business including operational measures on customer satisfaction and the organizations innovation and improvement activities, as well as financial measurements. By translating their strategy into the logical architecture of a strategy map and balanced scorecard, organizations create a common understandable point of reference for all their units and employees. Frustrated by the inadequacies of traditional performance measurement systems, some managers have abandoned financial measures like return on equity and earnings per share. Norton is the founder and president of renaissance solutions, a consulting firm in lincoln, massachusetts. Ihw 2005 balanced scorecard 2 balanced score card kaplan and norton describe the innovation of the balanced scorecard as follows. Managers can create a balanced scorecard by translating their companys strategy and mission. That way, youll be more likely to get the performance. The methodology relied on kaplan and nortons 1992 bscs.
These programs, certified by the george washington university center for excellence in public leadership, part of the college of professional studies, are designed to give you the tools and skills needed to help your organization. Norton the balanced scorecard tracks all the important elements of a companys strategyfrom continuous improvement and partnerships to teamwork and global scale. The balanced scorecard measures that drive performance. The scoiecard tracks the key elements of a companys strategy fiom continuous improvement and partnerships to tearnwork and global scale. The balanced scorecard was developed by kaplan and norton 1992 as a performance measurement framework that added strategic nonfinancial performance measures to the traditional financial metrics to give managers and executives a more clear and holistic view of organizational performance. The balanced scorecardmeasures that drive performance robert s. The combina tion of performance and service measures how the companys products or services contribute to creating value for its customers. A practitioners guide to the balanced scorecard pdf 268kb. The balanced scorecard can only erational actions, and financial success should be the translate a companys strategy into specific measur logical consequence of doing the fundamentals well. Using the balanced scorecard as a strategic management system. Balanced scorecard basics balanced scorecard institute.
David norton as a framework for measuring organizational performance using a more balanced set of performance measures. Senior execu tives understand that their organizations, measure ment system strongly affects the behavior of man agers and employees. A balanced scorecard is a performance metric used in strategic management to identify and improve various internal functions of a. Definition and concept an approach to the provision of information to the management to assist with. Setting measures and targets that drive performance, a. The balanced scorecard measures that drive performance by. The internal measures for the balanced scorecard should stem from the business processes that have the greatest impact on customer satisfactionfactors that affect cycle time, quality, employee. Balanced scorecard bsc, developed in 1992, is widely adopted by the enterprises around the world, and many nonprofit organizations. Balanced scorecard is a strategic management tool, used in both strategy formulation, organisational alignment and performance management brudan, 2010. Lead time measures the time required for the com eral goals into four specific goals and identified an pany to meet its customers needs. Procedia economics and finance 7 20 197 a 204 22125671 20 the authors.
Balanced scorecard is a strategy performance management tool a semistandard structured report, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions. Senior executives understand that their organizations measurement system strongly affects the behavior of managers and employees. It is through the process of developing measures that organizations establish, in concrete terms, the drivers of performance. They are the authors of the balanced scorecard measures that drive perfor mance hbr januaryfebruary 1992 and putting the balanced scorecard. The balanced scorecard was developed 12 years ago and has grown in popularity and is used by more than 50% of the fortune 500 companies as a performance measurement and strategic management tool.
The balanced scorecardmeasures that drive performance 1992. Kaplan and norton chose the following to describe the balanced scorecard. Over 7,500 people worldwide have been certified in balanced scorecard or key performance indicator development since 2006. Introduction to the balanced scorecard and performance measurement systems 5 as a result of continued research and innovations over the last 15 years, the bsc has gone through an evolutionary process of improvement, from performance measurement 19901996 to performance management 19962000, to becoming a globally. Conceptual foundations of the balanced scorecard robert s. Measures that drive performance hbr onpoint enhanced edition robert s. Measures that drive performance 1992 and bsc concept is first mentioned in this article and accepted to the business literature. More than providing information on whether or not business targets are achieved, balanced scorecard also clarifies the impact on corporate strategy. During a yearlong research project with 12 companies at the leading edge of performance measurement, we devised a balanced scorecard a set of measures that gives top managers a fast but. Balanced scorecard other bibliographies cite this for me.
By the 19805, many executives were convinced that traditional measures of financial performance didnt let the robert s. This cited by count includes citations to the following articles in scholar. Developed by robert kaplan and david norton, the balanced scorecard method translates an. And it complements those financial measures with three sets of operational measures related to customer satisfaction, internal processes, and the organizations ability to learn and improvethe activities that drive future financial performance. Balanced score card in an article the balanced scorecard measures that drive. Hbr in 1992 under the title of the balanced scorecard. Balanced scorecard topic gateway series essentially, the bsc is a management system that enables an organisation to identify and clarify its vision and strategy, and translate them into action.
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